Reverse Mortgage
What is a Reverse Mortgage?
A loan that enables homeowners 62 and older, to convert unused (dorment) home equity into tax-free income without selling, giving up title, or having monthly mortgage payments.
The payment stream is "reversed" and the lender makes payments to the Senior.
Eligible property types are single-family homes, manufactured homes built after June 1976, qualified condominiums, and townhouses.
Retirement Years Enhanced?
Seniors can use the funds from the reverse mortgage loan for anything:
- daily living expenses;
- home repairs or modifications;
- health care expenses, including prescription drugs or in-home care;
- pay-off of existing debts;
- lifestyle enhancement;
- prevention of foreclosure;
- Payoff first or second mortgages;
- and any other needs they may have.
There are no income or medical requirements to qualify.
What are the Payment Options?
Seniors can choose how to receive the money from a reverse mortgage loan:
- all at once (lump sum);
- fixed monthly payments (for up to life);
- a line of credit;
- or a combination of these.
The amount of money Seniors get from a reverse mortgage loan depends on:
- age,
- type of reverse mortgage loan selected,
- appraised home value,
- current interest rates,
- and where they live.
The funds from a reverse mortgage loan are tax-free; it's the Seniors money, not additional income.
A reverse mortgage will not affect the Seniors Social Security or Medicare benefits.
Paying Back the Reverse Mortgage?
No monthly payments are due on a reverse mortgage loan while it is outstanding.
The reverse mortgage loan is repaid only when the Senior:
- no longer occupy the home as their principal residence (the last remaining spouse, in cases of couples)
- pass away,
- sell the home,
- or permanently move out.
The amount owed can never exceed the value of the home.
When the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to the Senior or their estate.